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Elevated prices for staples and reduced income opportunities driving major assistance needs

  • Food Security Outlook
  • Yemen
  • July - December 2015
Elevated prices for staples and reduced income opportunities driving major assistance needs

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  • Key Messages
  • National Overview
  • Key Messages
    • Wheat flour was only sporadically available in 11 governorates during the final week of July, with a slight improvement in availability in southern governorates. Prices ranged from YER 143/KG in Dhamar to YER 275/KG in Aden, twice the pre-crisis level. The average price across governorates was 37 percent above February 2015 prices. Reports indicate that staple prices can vary greatly in some local markets, with prices rising drastically until new shipments reach the market.

    • The average price for diesel across governorates during the fourth week of July was YER 732/liter, reflecting a decrease from YER 806/liter a month prior. Availability of diesel also improved, but was still only sporadically available in eight governorates. Diesel had been available at a price of YER 150/liter across governorates in February.

    • The ongoing conflict has continued to displace households during July, disrupting livelihoods strategies and access to food and water for IDPs and some host communities. The majority of IDPs are from Aden, Ad Dali, and Sa’dah. Continuing conflict will likely cause further displacement, particularly in Ta’izz where conflict has intensified. 

    • Ongoing conflict, insecurity, and displacement, restrictions on imports and movement of food and fuel, elevated prices of staple foods and cooking gas, and major disruptions to public and private sector sources of household income are limiting food access for poor households in most areas. 


    National Overview

    Current Situation

    Armed conflict between Al Houthies and groups opposing them continued through July in many parts of the country, including in Ma’rib, Shabwah, Abyan, and Lahij, and intensified in Aden and Ta’izz, particularly during the second half of the month. Aerial and naval bombardment by the Saudi-led coalition has continued in many areas, including areas affected by ground fighting (including Aden, Ta’izz, Abyan, Lahij, Shabwah, and Ma’rib) and where extensive ground fighting is not ongoing (including Sana’a Governorate, Sana’a City (Amanat Al Asimah), Hajjah, Sa’dah, and others). Estimates for July indicate that 1.27 million people have been internally displaced since the start of the coalition airstrikes on March 26th, with approximately half of these people concentrated in Hajjah, Ad Dali, and Aden governorates.

    By mid-July, forces supporting president Hadi, with support from the Saudi-led coalition, were able to regain control of most districts of Aden from Al Houthi combatants. There are indications that constraints on the arrival of cargo vessels into the port of Aden may be easing slightly. Data from the ship tracking service FleetMon suggests that seven cargo vessels arrived in the port area at Aden between July 1st and 29th, including a vessel chartered by WFP to carry 3,000 metric tons (MT) of food. This vessel was able to dock on July 21 after waiting for three weeks for a safe window. The seven July arrivals at Aden are compared to zero total arrivals in June, three in May, and zero in April.

    The conflict has severely limited imports of fuel, due to restrictions imposed by the Saudi-led coalition and due to limitations in transporting fuel from ports to markets. Although estimates from OCHA indicate that fuel imports have improved from about 1 percent of monthly needs in April to 18 percent in May and 44 percent in June, they are still well below the monthly import rate prior to the crisis. Domestic refining, which provided approximately 46 percent of national consumption of petroleum products in 2013, has been suspended during the conflict, significantly increasing the import requirement.

    During the last week of July, WFP data indicated that diesel was only sporadically available in eight governorates, with an average price of YER 732/liter. Petrol was only sporadically available in almost all governorates, with an average price of YER 611/liter. These prices are compared with availability across governorates in February at the official price of YER 150/liter.

    Estimates indicate that food imports have been less restricted than fuel, and WFP data indicates that average price rises for staples, including wheat flour, have been less severe than those for diesel and petrol. However, availability of some staples, including wheat flour, has been sporadic or limited in some markets during the course of the conflict since March. WFP market monitoring indicates that wheat flour was only sporadically available in 11 governorates during the final week of July, with a slight improvement in availability in southern governorates. Prices ranged from YER 143/KG in Dhamar to YER 275/KG in Aden, twice the pre-crisis level (Figure 4). The average price across governorates was 37 percent above February 2015 prices. However, reports indicate that staple prices can vary significantly in some local markets, with prices rising greatly until new shipments are received in the market.

    Sporadic availability and increased prices for cooking gas, which is typically produced domestically, are also adding to household expenditure needs and limiting options for food preparation. Average prices are up by 168 percent during the conflict, with some governorates experiencing more drastic increases, including Ad Dali (255 percent) and Lahij (246 percent).

    The fuel shortages have affected the power sector. The Ministry of Planning and International Cooperation (MoPIC) has indicated that power supply through the public grid was just 150 MW in June, down from about 1,300 MW prior to the crisis. Electricity shortages have affected all economic sectors, and have been a factor in reduced employment opportunities. According to MoPIC, only three percent of enterprises were functioning normally by May 2015. Power shortages have increased the cost of pumping water for irrigation and human consumption, storage, and transportation, leading to reduced production and marketing for many enterprises, including in grain milling, fisheries, agriculture, and livestock.

    Crude oil production and exports, which normally comprise a major portion of government revenue, have almost entirely halted since April 2015. According to MoPIC, government revenue from oil exports declined from USD 322.3 million for the two-month period of April and May 2014, to just USD 0.1 million during April and May of this year.

    According to MoPIC, 25.5 percent of households in Yemen, comprising approximately 6.5 million people, are primarily dependent on public sector salaries as a main source of income. In Aden and other areas affected by ground conflict, many people have not received public salaries since the escalation of conflict in late March, due to insecurity and disruptions to transfer systems. This has directly affected financial access to food for households dependent on public sector salaries. Additionally, the halt of exports of agricultural and fisheries products during the conflict has contributed to the disruption of livelihoods for households dependent on these sectors, particularly in Al Hudaydah, Hajjah, and Sa’dah, according to the FAO Food Security Information System (FSIS). Estimates from FSIS indicated that an average of 50 trucks of fisheries products were exported daily to Saudi Arabia prior to the conflict. These exports have halted since Saudi military intervention began at the end of March.

    Although updated information on ongoing agricultural seasons is very limited, several factors, as well as anecdotal information, suggest that agricultural production and labor, including the livestock sector, are significantly affected by the ongoing conflict. An estimated 29 percent of the total cropped area is normally irrigated by diesel-powered pumps and water trucking. The sporadic availability and elevated prices of diesel thereby have a direct impact on a significant portion of the agriculture sector. In addition to elevated fuel prices, the conflict has driven up transportation costs due to insecure routes. With high irrigation costs and decreased demand for some agricultural products, many laborers in the sector have experienced reduced wages or are unable to find work. Livestock sales have also been affected. For example, in areas most reliant on sheep, including in Al Hudaydah, Hajjah, Lahij, and Shabwah, prices have declined due to increased supply on local markets, as typical trade to other areas has decreased under elevated transportation costs and conflict-related restrictions.

    Normal economic activity has been greatly disrupted during the conflict. For poor households, essentially all normal sources of income are greatly reduced. Although many markets are still functioning and traders are finding ways to move some supplies, economic access to available food is an increasing concern. The increase in prices for critical food and non-food commodities during the conflict, combined with disruptions to normal livelihoods and income-generating activities, has further weakened purchasing power for the majority of households during the last four months.

    Ongoing conflict, insecurity, and displacement, restrictions on imports and movement of food and fuel, elevated prices of staple foods and cooking gas, and major disruptions to public and private sector sources of household income are limiting food access for poor households in most areas. Very limited access for commercial traders and particularly humanitarian actors in the southern parts of the country, including Aden, Ta’izz, and Ad Dali, has deteriorated food security outcomes. Most governorates are estimated to be facing Crisis (IPC Phase 3) or Emergency (IPC Phase 4) acute food insecurity.

    Assumptions

    The most likely scenario for July to December 2015 is based on the following assumptions:

    • Areas that are typically supplied by imports through the port of Aden, including Aden, Lahij, Abyan, Shabwah, and Ad Dali, are likely to experience some improvement in trade flows as the port resumes partial operations.
    • Fuel and food import quantities will likely remain below the pre-crisis levels. The ability to move goods from ports to markets will be sporadic as the conflict conditions change and develop.
    • The ability for households to receive remittances from abroad in several governorates in the south, including Aden, Ad Dali, Shabwah, Lahij, and Abyan, is likely to improve with the gradual moderation of conflict in these governorates, as banks and transfer mechanisms normalize during the coming months.
    • The July to September 2015 rains are likely to be average to below average, with the western coastal strip likely to have below-average rainfall.
    • The sorghum harvests in September and October are likely to be below average, especially in the western coastal strip of Hajjah and Al Hudaydah. Wheat harvests from September through November, primarily in Sana’a, Dhamar, Ibb, Ma’rib, Hadramaut, and Al Jawf, are likely to be average to below average.
    • The scenario period from July to December encompasses the key season for grazing and use of locally harvested sorghum as fodder, typically improving livestock body conditions and prices. However, livestock sales this year are likely to be adversely impacted by insecurity and high transportation costs, as well as decreased demand due to reduced household income.
    • Further movement of IDPs, as well as new displacement, is likely within Ta’izz, Ma’rib, Al Bayda, Lahij, Ibb, Hajjah, and Al Hudaydah Governorates during the next six months, as ground conflict continues to shift to new areas. The number of IDPs from Sa’dah is likely to increase due to continuing heavy airstrikes, increasing assistance needs in adjoining governorates, particularly in Hajjah and Amran.

    Most Likely Food Security Outcomes

    The number of people in Crisis (IPC Phase 3) and Emergency (IPC Phase 4) acute food insecurity is likely to increase in the coming months, as households exhaust strategies to cope with shocks to most normal income sources and increased prices for basic goods, including staple food items. As Yemen imports more than 80 percent of its cereals and domestic oil refining has halted entirely, the resumption of normal commercial fuel and food imports is critical to prevent further deterioration of food security outcomes.

    In southern areas, with partial resumption of operations at the port of Aden, trade and humanitarian assistance flows may mitigate further deterioration of outcomes, particularly in areas where ongoing ground fighting may shift to other areas. However, area classifications are likely to remain at Emergency (IPC Phase 4) in Ad Dali, Lahij, Abyan, and Shabwah Governorates. In Aden, outcomes are likely to improve to Crisis (IPC Phase 3) by October, as conflict subsides and imports and humanitarian access resume.

    In central and northern areas, shifting conflict may cause additional displacement and disruption to trade flows and humanitarian assistance. Sa’dah, Hajjah, Al Hudaydah, and Ta’izz are all likely to remain in Emergency (IPC Phase 4).

     

    For more information on the outlook for specific areas of concern, please click the download button at the top of the page for the full report.

     

    Figures

    Figure 1

    Seasonal calendar for a typical year

    Source: FEWS NET

    July 2015 wheat flour prices by governorate

    Figure 2

    July 2015 wheat flour prices by governorate

    Source: WFP

    Figure 1

    Source:

    To project food security outcomes, FEWS NET develops a set of assumptions about likely events, their effects, and the probable responses of various actors. FEWS NET analyzes these assumptions in the context of current conditions and local livelihoods to arrive at a most likely scenario for the coming eight months. Learn more here.

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